Lin v. Airbnb, Inc.

Lin v. Airbnb, Inc.
Court (s) Database
Federal Court Decisions
Date
2019-12-05
Neutral citation
2019 FC 1563
File numbers
T-1663-17
Decision Content
Date: 20191205
Docket: T-1663-17
Citation: 2019 FC 1563
Ottawa, Ontario, December 5, 2019
PRESENT: The Honourable Mr. Justice Gascon
PROPOSED CLASS PROCEEDING
BETWEEN:
ARTHUR LIN
Plaintiff
and
AIRBNB, INC., AIRBNB CANADA INC., AIRBNB IRELAND UNLIMITED COMPANY, AIRBNB PAYMENTS UK LIMITED
Defendants
ORDER AND REASONS
I. Overview
[1] In March 2016, Mr. Arthur Lin, a British Columbia resident, booked an accommodation in Japan using the Airbnb online platform [Airbnb Platform]. The Airbnb Platform is a digital marketplace connecting individuals seeking accommodations [Guests] with other individuals offering accommodations [Hosts], and allowing them to transact. Mr. Lin claims he was ultimately charged a price higher than the price initially displayed to him for the accommodation booking services supplied on the Airbnb Platform. Many other individuals residing in Canada have reserved accommodations using the Airbnb Platform, also experiencing different prices displayed to them.
[2] Mr. Lin seeks an order certifying this action as a class proceeding under Rule 334.16(1) of the Federal Courts Rules, SOR/98-106 [Rules] and granting an order under Rule 334.17. As the proposed representative plaintiff, Mr. Lin seeks compensation from the defendants Airbnb, Inc., Airbnb Canada Inc. and Airbnb Ireland Unlimited Company, as well as Airbnb Payments UK Limited [collectively, Airbnb], on behalf of all individuals residing in Canada who, on or after October 31, 2015, reserved an accommodation anywhere in the world using Airbnb, excluding individuals reserving an accommodation primarily for business purposes.
[3] Mr. Lin alleges that Airbnb breached section 54 of the Competition Act, RSC 1985, c C‑34 [Competition Act], a rarely used criminal offence known as “double ticketing”. Section 54 prohibits a person from supplying a product at a price that exceeds the lowest of two or more clearly expressed prices at the time the product is supplied. More specifically, Mr. Lin contests the fact that Airbnb adds “service fees” to the final price it charges for its accommodation booking services, although these fees are not included in the initial price per night displayed on the Airbnb Platform. In his proposed class proceeding, the main remedies sought by Mr. Lin are damages and the costs of investigation and prosecution, both pursuant to section 36 of the Competition Act. Mr. Lin also had claims of permanent injunction and punitive damages but he abandoned them at the hearing before this Court.
[4] In addition to his motion for certification, Mr. Lin brought a motion to add Airbnb Payments UK Limited [Airbnb Payments] as a defendant, which was unopposed by the defendants.
[5] Mr. Lin maintains that all required legal elements for certification have been met, namely, (i) that there is a reasonable cause of action; (ii) that there is an identifiable class; (iii) that there are common questions of law and fact; (iv) that certification is the preferred procedure; and (v) that he is an appropriate representative of the class. Airbnb opposes certification of the class as it claims that Mr. Lin has failed to meet those five necessary preconditions.
[6] The only issue before the Court is whether Mr. Lin has met the requirements of Rule 334.16(1) to certify this action as a class proceeding and, if so, the details of the certification order that should be issued under Rule 334.17 as a result. At the center of the debate between the parties are the scope and interpretation of section 54 on “double ticketing” and its application to the circumstances of Mr. Lin and to Airbnb.
[7] For the reasons detailed below, and considering the generous approach that courts are required to take at the certification stage, I will grant Mr. Lin’s motion for certification, conditional upon an amendment to be made to his proposed class definition. Even though the scope of section 54 of the Competition Act and its application to this case are not free from doubt, I conclude that it is not plain and obvious that the pleadings disclose no reasonable cause of action. I further find that, conditional upon the amendment discussed below, (i) there is an identifiable class of two or more persons [Class]; (ii) there are common issues predominating over questions affecting only individual members, and their resolution will advance the claims of all Class members and help the Court avoid duplication of fact-finding and/or legal analysis; (iii) a class proceeding is the preferable procedure for the just and efficient resolution of the common questions of law and fact, and will achieve all three principles underpinning class actions (i.e., judicial economy, behavioural modification and access to justice) more effectively than alternative procedures; and (iv) Mr. Lin is an appropriate representative plaintiff.
II. Background
A. Factual context
[8] Airbnb operates the Airbnb Platform. In Canada, the Airbnb Platform is available through the website www.airbnb.ca, as well as through various mobile applications. The Airbnb Platform allows Guests to book overnight stays from Hosts anywhere in the world.
[9] Airbnb operates what can be described as a two-sided transaction platform, providing services simultaneously to two different groups of customers (identified as Hosts and Guests) who depend on the platform to conclude a transaction. In other words, the Airbnb Platform brings together providers and consumers of a particular service, namely the booking of overnight stays in other people’s accommodations.
[10] In its Terms of Service, various versions of which are attached to the affidavit of Airbnb’s deponent, Mr. Kyle Miller, Airbnb states that it provides an online platform connecting Hosts, who have accommodations to list and book, with Guests seeking to book such accommodations. In its Terms of Service, Airbnb itself defines these as its “Services” accessible on different websites. The Terms of Service also state that Airbnb makes available an online platform or marketplace with related technology for Guests and Hosts to meet online and arrange for bookings of accommodations, directly with each other.
[11] Various entities are involved in operating Airbnb in Canada. First, Airbnb Ireland Unlimited Company is the entity entering into contractual relationships with Canadian users. Second, Airbnb, Inc. (also referred to as “Airbnb US” by Airbnb) owns and operates the www.airbnb.com website. Airbnb, Inc. employs Mr. Miller, whose team is responsible for the localized versions of the Airbnb Platform, and its name is mentioned on the www.airbnb.ca website. The same contact address is used on the www.airbnb.ca and www.airbnb.com websites, and Airbnb, Inc. owns four registered Canadian trademarks displayed on the www.airbnb.ca website. Third, Airbnb Canada Inc. is involved in procuring and holding the domain www.airbnb.ca, although Airbnb claims it is only a marketing entity. Fourth, Airbnb Payments collects and distributes payments made on the Airbnb Platform.
[12] It is not disputed that Airbnb does not own accommodations nor manage accommodations on behalf of the Hosts. Hosts decide when they want to make their accommodations available on the Airbnb Platform, the price for their accommodations, and the booking requests they accept. With respect to price, Hosts can set different rates depending on the dates and length of the contemplated stay, and they can decide to charge cleaning fees or fees for additional visitors.
[13] When Guests search for accommodations on the Airbnb Platform, they are typically directed to a search results page. This page lists the accommodations and displays the properties’ price per night [First Price] based on the Guest’s search parameters, with no indication that additional fees will be added. The First Price shown on the search results page includes: (i) the price per night as set by the Host; (ii) cleaning fees, if applicable, divided by the number of nights; and (iii) fees per night for additional visitors, if applicable. If the dates of the stay or the number of visitors are not specified by the Guest in the search parameters, the search results page will only display an average First Price. When Guests select the desired accommodation, they are redirected to another page known as the listing page. The listing page displays a second price [Second Price or Total Price] consisting of: (i) the First Price for the specific dates and number of visitors, multiplied by the number of nights; (ii) Airbnb’s service fees [Service Fees]; and (iii) taxes. When they are on the listing page, Guests can modify the dates and number of visitors, in which case the Second Price is updated accordingly. In some cases (such as when they search an accommodation they already know or have already booked), Guests can also directly access the listing page of an accommodation without running a search, and therefore without actually being shown the First Price displayed on the search results page. The First Price and the Second Price are both displayed on the Guests’ receipt.
[14] Airbnb charges a Service Fee to Guests (between 0% and 20% of the First Price according to Airbnb, or between 5% and 15% according to Mr. Lin), as well as a Service Fee to Hosts (generally 3% of the First Price). Airbnb collects the Second Price from Guests and pays to Hosts the First Price, after having deducted the Hosts’ Service Fee.
[15] Mr. Lin used the Airbnb Platform both as a Guest and as a Host. The event he describes in his Statement of Claim to illustrate how Airbnb allegedly engaged in “double ticketing” is a reservation he made as a Guest, on or about March 20, 2016, for a vacation to Japan. On the Airbnb Platform, Mr. Lin searched for the dates May 24, 2016 to May 31, 2016. A number of accommodations were displayed on a search results page, including the one he eventually booked; the First Price for that accommodation was displayed as being $109.00 per night for a stay of seven nights. When Mr. Lin selected this accommodation, he was redirected to a listing page displaying a Second Price of $855.00, or $122.14 per night. This Second Price was broken down as follows: $102.00 per night for seven nights, $48.00 for cleaning fees, and $91.00 for Airbnb’s Services Fees. I add that, in other transactions he separately made on the Airbnb Platform as a Host, Mr. Lin also offered an accommodation which was booked six times in 2016.
[16] Guests and Hosts are bound by Airbnb’s Terms of Service, for transactions made since October 2015, as well as by Airbnb’s Payments Terms of Service for transactions made since March 2016 [collectively, the Terms]. Guests and Hosts have to accept the Terms during the account creation process prior to booking an accommodation. When the Terms are updated, Guests and Hosts further have to accept the updated version before transacting again on the Airbnb Platform. Both Airbnb’s Terms of Service and Payments Terms of Service have been updated several times since October 2015 and March 2016, respectively. The Terms notably include provisions to the effect that:
- Canadian residents are deemed to be contracting with Airbnb Ireland Unlimited Company;
- Canadian residents are not subject to the arbitration agreement and class action waiver provisions;
- The agreement with Airbnb will be interpreted in accordance with the laws of Ireland without negating consumer protection laws applicable in Canada;
- Guests and Hosts enter into contractual relationships with each other when a booking is made, with Airbnb acting on behalf of Hosts only to facilitate payments; and
- Airbnb may charge Service Fees to Hosts and Guests for using the Airbnb Platform.
[17] In its Terms, Airbnb identifies the First Price described by Mr. Lin as “Listing Fee”, and the Service Fees it charges to Hosts and Guests as the “Host Fee” and “Guest Fee”, respectively. Airbnb calls the Second Price or Total Price described by Mr. Lin as the “Total Fees”. The damages sought by Mr. Lin are specifically defined in his Statement of Claim as being equivalent to the difference between the Second Price and the First Price, minus the taxes. In other words, the damages claimed are the Service Fees.
[18] Airbnb estimates that approximately 2.2 million Canadian-resident Guests reserved an accommodation using the Airbnb Platform between October 31, 2015 and August 2018.
B. Orders sought
[19] In his motion for certification, Mr. Lin seeks the following orders from the Court:
1. This Action is certified as a class proceeding;
2. The Class is defined as:
All individuals residing in Canada who, on or after October 31, 2015, reserved an accommodation for anywhere in the world using Airbnb, excluding individuals reserving an accommodation primarily for business purposes.
3. The Plaintiff is appointed as the representative plaintiff for the Class;
4. The Common Questions are stated to be those set out in Schedule “A” to the Notice of Motion;
5. The nature of the Class is stated to be violations of section 54 of the Competition Act;
6. The relief sought by the Class is stated to be:
a. a declaration that the Defendants charged every Class member a price higher than the lowest of two or more prices clearly expressed by the Defendants to each Class Member, contrary to section 54 of the Competition Act;
b. damages, pursuant to section 36 of the Competition Act, for the Defendants’ conduct in contravention of section 54 of the Competition Act;
c. an Order pursuant to Rules 334.28(1) and (2) for the aggregate assessment of monetary relief and its distribution to the Plaintiff and the Class members;
d. costs of investigation and prosecution of this proceeding on a full-indemnity basis, pursuant to section 36 of the Competition Act;
e. pre-judgment and post-judgment interest pursuant to sections 36 and 37 of the Federal Courts Act, RSC 1985, c. F-7;
f. exemplary or punitive damages; and
g. such further and other relief as this Honourable Court deems just.
7. The Litigation Plan attached as Schedule “B” to the Notice of Motion is approved as a workable method of advancing the litigation;
8. The Notice Plan included in the Litigation Plan is approved as a workable method of contacting the Class members;
9. The Defendants pay the costs of the Notice Plan;
10. The Defendants provide counsel for the Plaintiff with a list of Class members and those Class members’ contact information following the expiry of the opt-out period in part 11 of the Order;
11. Class members who wish to opt-out of the Action must do so in writing within thirty days of the date of the Order;
12. Both the Plaintiff and Defendants bear their own costs for this certification motion, pursuant to Rule 334.39, without limiting the Plaintiff’s right to seek the costs for prosecution of the whole proceeding at the conclusion of the trial, pursuant to section 36 of the Competition Act; and
13. Such further and other relief as this Honourable Court deems just.
C. Legislative framework
[20] Part 5.1 of the Rules sets out the framework for establishing and managing class proceedings before this Court. Rules 334.16(1) and (2) and 334.18 are the main provisions governing the certification of class proceedings. They are reproduced in their entirety in Annex A of these Reasons.
[21] Rule 334.16(1) prescribes that a class action shall be certified if the following five conditions are met: (i) the pleadings disclose a reasonable cause of action; (ii) there is an identifiable class of two or more persons; (iii) the claims raise common questions of law or fact; (iv) a class proceeding is the preferable procedure for the just and efficient resolution of those common questions; and (v) there is an appropriate representative plaintiff. Rule 334.16(1) uses mandatory language, meaning that the Court shall grant certification where all five elements of the test are satisfied (Sivak v Canada, 2012 FC 271 at para 5). Since the test is conjunctive, if a plaintiff fails to meet any of the five listed criteria, the certification motion must fail (Buffalo v Samson First Nation, 2008 FC 1308 [Buffalo FC] at para 35, aff’d 2010 FCA 165 at para 3).
[22] Conversely, Rule 334.18 describes factors which cannot by themselves, either singly or combined with the other factors listed, provide a sufficient basis to decline certification (Kenney v Canada (Attorney General), 2016 FC 367 [Kenney] at para 17; Buffalo FC at para 37). These factors are: (i) the relief claimed includes a claim for damages that would require an individual assessment after a determination of the common questions of law or fact; (ii) the relief claimed relates to separate contracts involving different class members; (iii) different remedies are sought for different class members; (iv) the precise number of class members or the identity of each class member is not known; or (v) the class includes a subclass whose members have claims that raise common questions of law or fact not shared by all of the class members. Nevertheless, by using the word “solely”, the provision suggests that these factors may be relevant considerations on a motion for certification, provided the overall conclusion underlying a potential refusal is based on other concerns as well (Kenney at para 17).
[23] It bears noting that the certification criteria established in Rule 334.16(1) are akin to those applied by the courts in Ontario and British Columbia (Canada v John Doe, 2016 FCA 191 [John Doe FCA] at para 22; Buffalo v Samson Cree National, 2010 FCA 165 [Buffalo FCA] at para 8). Indeed, much of the Supreme Court of Canada’s [SCC] case law relating to class actions on which this Court and the Federal Court of Appeal [FCA] have relied arose in those provinces.
D. General principles for certification
[24] Before analyzing the individual requirements prescribed by the Rules, some general and fundamental principles governing certification motions must be underscored.
[25] In Hollick v Toronto (City), 2001 SCC 68 [Hollick], the SCC stated that the certification criteria should always be assessed while keeping in mind the overarching purposes of class proceedings. First, foremost consideration should be given to the fact that class actions serve judicial economy by avoiding unnecessary duplication of fact-finding and legal analysis. Second, class actions improve access to justice by making economical the prosecution of claims that any one class member would find too costly to bring forward on his or her own. Third, class actions serve efficiency and justice by ensuring that wrongdoers modify their behaviour by taking full account of the harm that they have caused or might cause. Therefore, it is “essential […] that courts [do] not take an overly restrictive approach to the legislation, but rather interpret [class action legislation] in a way that gives full effect to the benefits foreseen by the drafters” (Hollick at para 15; Western Canadian Shopping Centres Inc. v Dutton, 2001 SCC 46 [Dutton] at paras 27-29; Condon v Canada, 2015 FCA 159 [Condon] at para 10). As the SCC noted in Hollick, “the certification stage focuses on the form of the action. The question at the certification stage is not whether the claim is likely to succeed, but whether the suit is appropriately prosecuted as a class action” (emphasis in original) (Hollick at para 16). In other words, the court plays a screening role and must view the application as a procedural means (Infineon Technologies AG v Option consommateurs, 2013 SCC 59 [Infineon] at para 65; Vivendi Canada Inc. v Dell’Aniello, 2014 SCC 1 [Vivendi] at para 37). The objective of certification is to determine if, from a procedural standpoint, the action is best brought in the form of a class action (Hollick at para 16). Conversely, certification seeks to filter out manifestly unfounded and frivolous claims.
[26] The SCC recently firmly reiterated and reaffirmed these core principles in Pioneer Corp. v Godfrey, 2019 SCC 42 [Godfrey] and in L’Oratoire Saint-Joseph du Mont-Royal v J.J., 2019 SCC 35.
[27] It is also well established that the onus on a party seeking certification is not an onerous one. The test to be applied on the first criterion for certification – that the pleadings disclose a reasonable cause of action – is similar to that applicable on a motion to strike or dismiss (Pro-Sys Consultants Ltd. v Microsoft Corporation, 2013 SCC 57 [Pro-Sys] at para 63; Alberta v Elder Advocates of Alberta Society, 2011 SCC 24 [Elder] at para 20). The test is whether it is “plain and obvious” that the pleadings disclose no reasonable cause of action and that no claim exists (Godfrey at para 27; R. v Imperial Tobacco Canada Ltd., 2011 SCC 42 [Imperial Tobacco] at para 17; Elder at para 20; Hollick at para 25; Hunt v Carey Canada Inc., [1990] 2 SCR 959 [Hunt] at p 980).
[28] This threshold is very low (Rae v Canada (National Revenue), 2015 FC 707 [Rae] at para 54; Buffalo FC at para 43). It must be “used with care”, bearing in mind that the “law is not static and unchanging”, and that “[a]ctions that yesterday were deemed hopeless may tomorrow succeed” (Imperial Tobacco at para 21). Stated otherwise, a pleading should only be struck where the claim is so clearly futile that it has not the slightest chance of succeeding or is certain to fail (Hunt at para 33). Pursuant to that test, the claim must be so clearly improper as to be “bereft of any possibility of success” (LJP Sales Agency Inc. v Canada (National Revenue), 2007 FCA 114 at para 7; Wenham v Canada (Attorney General), 2018 FCA 199 [Wenham] at paras 27-33). The test is best expressed in the negative, and the Court must be convinced that the contemplated action has no chance of success and is doomed to fail (Wenham at para 22).
[29] For this first criterion, the facts alleged in the pleadings are assumed to be true and no evidence may be considered by the Court (John Doe FCA at para 23; Condon at para 13). Even though the facts are assumed to be true, they must still be pleaded in support of each cause of action; bald assertions of conclusions are not allegations of material fact and cannot support a cause of action (John Doe FCA at para 23; Mancuso v Canada (National Health and Welfare), 2015 FCA 227 at para 27; Merchant Law Group v Canada Revenue Agency, 2010 FCA 184 at para 34).
[30] For the remaining four certification criteria, the plaintiffs have the burden of adducing evidence to show “some basis in fact” that they have been met (Hollick at para 25; Pro-Sys at para 99). This threshold is also low, given the Court’s limited scope of factual inquiry and its inability to “engage in the finely calibrated assessments of evidentiary weight” at the certification stage (AIC Limited v Fischer, 2013 SCC 69 [Fischer] at para 40; Pro-Sys at paras 102, 104). That said, the “some basis in fact” standard cannot be assessed in a vacuum, and each case must be decided on its own facts. The “some basis in fact” requirement means that, for all certification criteria except the cause of action, an evidentiary foundation is needed to support a certification award, and the use of the word “some” implies that the evidentiary record need not be exhaustive or be a record on which the merits will be argued (Fischer at para 41, citing McCracken v Canadian National Railway Co., 2012 ONCA 445 at paras 75-76). The Court must therefore refrain from assessing the sufficiency of the alleged facts on its merits, and is not tasked with resolving conflicts in the evidence. It is trite law that the “some basis in fact” standard falls below the standard of proof on a balance of probabilities (Pro-Sys at para 102; John Doe FCA at para 24).
[31] While the certification stage is not intended to determine the viability or strength of the contemplated class action, the analysis of the evidence, however, cannot “amount to nothing more than symbolic scrutiny” (Pro-Sys at para 103). Given that the Court does not engage in a robust analysis of the merits at the certification stage, the outcome of a motion for certification will not be predictive of the action’s success at the common issues trial (Pro-Sys at para 105).
III. Analysis
A. Rule 334.16(1)(a): Reasonable cause of action
[32] The first certification requirement is that the pleadings disclose a reasonable cause of action. Mr. Lin’s Statement of Claim invokes one single cause of action based on sections 36 and 54 of the Competition Act. Mr. Lin pleads that, in providing its accommodation booking services to him and other Class members, Airbnb displayed an initial First Price excluding Airbnb’s Service Fees and a final, higher Second Price including such fees, and that Airbnb thus charged the Class members the higher of two displayed prices, in contravention of section 54 of the Competition Act. This breach of section 54, says Mr. Lin, renders Airbnb liable, under section 36 of the Competition Act, for damages equal to the Service Fees and for the costs of investigation.
[33] Airbnb responds that the pleadings (i.e., Mr. Lin’s Statement of Claim) do not disclose a reasonable cause of action since: (i) section 54 of the Competition Act does not apply to the pleaded facts, described by Airbnb as a situation where there are two prices for two different products; (ii) the defence provided by section 60 of the Competition Act applies to Airbnb; and (iii) Mr. Lin does not plead any loss or damage as required by section 36 of the Competition Act, since he would have paid the same price if the Service Fees were included in the First Price on the search results page. Airbnb notably relies on the Terms to support its arguments.
[34] I do not agree with Airbnb. Further to my review of the pleadings, I find that Airbnb mischaracterizes the “product” effectively defined and described by Mr. Lin in his Statement of Claim. In addition, even though Airbnb raises numerous valid points regarding the interpretation of sections 36 and 54 of the Competition Act and their application to this case, I am unable to conclude that, when the alleged facts are accepted as true, the cause of action pleaded by Mr. Lin is “plain and obvious” to fail. The objections voiced by Airbnb are matters to be determined at the trial on the merits with the benefit of a full evidentiary record and full legal submissions.
(1) Section 54 of the Competition Act
[35] Mr. Lin’s proposed class proceeding is based on section 54 of the Competition Act. This section creates the criminal offence of “double ticketing” and is part of the deceptive marketing practices offences contained in Part VI of the Competition Act entitled “Offences in Relation to Competition”. Section 54 reads as follows.
Double ticketing
Double étiquetage
54 (1) No person shall supply a product at a price that exceeds the lowest of two or more prices clearly expressed by him or on his behalf, in respect of the product in the quantity in which it is so supplied and at the time at which it is so supplied,
54 (1) Nul ne peut fournir un produit à un prix qui dépasse le plus bas de deux ou plusieurs prix clairement exprimés, par lui ou pour lui, pour ce produit, pour la quantité dans laquelle celui-ci est ainsi fourni et au moment où il l’est :
(a) on the product, its wrapper or container;
a) soit sur le produit ou sur son emballage;
(b) on anything attached to, inserted in or accompanying the product, its wrapper or container or anything on which the product is mounted for display or sale; or
b) soit sur quelque chose qui est fixé au produit, à son emballage ou à quelque chose qui sert de support au produit pour l’étalage ou la vente, ou sur quelque chose qui y est inséré ou joint;
(c) on an in-store or other point-of-purchase display or advertisement.
c) soit dans un étalage ou la réclame d’un magasin ou d’un autre point de vente.
[36] This prohibition against “double ticketing” first came into effect in 1975, as section 36.2 of the Combines Investigation Act, SC 1974-1975-1976, c 76 [Combines Act]. The language of section 36.2 of the Combines Act was identical to the current wording of section 54 of the Competition Act. Pursuant to that provision, a person commits a “double ticketing” offence when that person: (i) supplies a product; (ii) at a price that exceeds the lowest of two or more prices; (iii) which are clearly expressed on the product, on anything attached to or accompanying the product, or on any point-of-purchase display or advertisement. There are no other requirements for the offence. The language of the provision clearly suggests that section 54 relates strictly to the supplier’s conduct, and that it only applies to situations where different prices are expressed in respect of the same product in terms of quantity and time of supply. Subsection 2(1) of the Competition Act defines “product” as including an “article” and a “service”, so section 54 can apply to both. The word “supply” also has a broad meaning, being defined by subsection 2(1) as “in relation to a service, sell, rent or otherwise provide a service or offer so to provide a service”.
[37] I pause to observe that the “double ticketing” offence came into force at the same time as the “sale above advertised price” criminal offence, which was previously contained in former section 37.1 of the Combines Act and prohibited the supply of a product at a price higher than the price advertised. This criminal provision was repealed in 1999 and was replaced by the civilly reviewable conduct of “sale above advertised price” now contained at section 74.05 of the Competition Act. This reviewable conduct is sometimes referred to by the Competition Bureau as fragmented pricing or drip pricing (see for example: Competition Bureau, The Deceptive Marketing Practices Digest, June 2015).
[38] A brief review of the legislative history of section 54 suggests that this provision was meant to prevent the display of two price tags on a single product. The House of Commons and Senate debates indicate that, at the time of its adoption, the “double ticketing” prohibition stemmed from concerns about high food prices (House of Commons Debates, 29th Parl, 2nd Sess, vol 1 (13, 20, and 27 March 1974) at 489, 708 and 918; House of Commons Debates, 30th Parl, 1st Sess, vol 1 (22 October 1974) at 624-625 and 627; House of Commons Debates, 30th Parl, 1st Sess, vol 8 (21 October 1975) at 8419; Senate Debates, 30th Parl, 1st Sess, vol 2 (13 November 1974) at 1295). In essence, consumers were complaining about the food industry’s practice of increasing the price of existing inventory in response to increased procurement costs, and about how certain grocery stores would put new price stickers on their products beside the previous, lower price.
[39] Even though the “double ticketing” provision has now been part of the Competition Act and its predecessors for over 40 years, very limited jurisprudence on this provision is available. Airbnb referred to one case, The Consumers’ Association of Canada et al. v Coca-Cola Bottling Company et al., 2006 BCSC 863 [Coca-Cola], aff’d 2007 BCCA 356, where recycling fees for bottled drinks were excluded in the price displayed on the shelf for these products, but were added at the cashier and charged to the consumer in the final price. The court found that this did not constitute “double ticketing” and did not breach section 54 (Coca-Cola at paras 69, 93). In his submissions, Mr. Lin did not refer the Court to any precedent on that provision. The Court has identified two other cases mentioning section 54, namely Apotex Inc. v Hoffman La-Roche Limited, 195 DLR (4th) 244, 2000 CanLII 16984 (Ont CA) at para 20 and a small claims case from Quebec, Massé c Sears Canada Inc., 2012 QCCQ 15181 at paras 5, 16. However, none of these cases discussed the interpretation of the “double ticketing” provision to any extent.
(2) Section 36 of the Competition Act
[40] For its part, section 36 of the Competition Act provides:
Recovery of damages
Recouvrement de dommages-intérêts
36 (1) Any person who has suffered loss or damage as a result of
36 (1) Toute personne qui a subi une perte ou des dommages par suite :
(a) conduct that is contrary to any provision of Part VI, or
a) soit d’un comportement allant à l’encontre d’une disposition de la partie VI;
[…]
[…]
may, in any court of competent jurisdiction, sue for and recover from the person who engaged in the conduct or failed to comply with the order an amount equal to the loss or damage proved to have been suffered by him, together with any additional amount that the court may allow not exceeding the full cost to him of any investigation in connection with the matter and of proceedings under this section.
peut, devant tout tribunal compétent, réclamer et recouvrer de la personne qui a eu un tel comportement ou n’a pas obtempéré à l’ordonnance une somme égale au montant de la perte ou des dommages qu’elle est reconnue avoir subis, ainsi que toute somme supplémentaire que le tribunal peut fixer et qui n’excède pas le coût total, pour elle, de toute enquête relativement à l’affaire et des procédures engagées en vertu du présent article.
[41] To establish a claim under paragraph 36(1)(a), the plaintiff must plead that the defendants breached a provision of Part VI of the Competition Act on “Offences in Relation to Competition” and that he or she suffered loss or damage as a result of the impugned criminal conduct. The right to pursue an action in damages and to seek recovery of certain investigation costs is subject to some important limits, including a limit to pursuing compensatory damages (i.e., no punitive damages or injunctive relief).
[42] I agree with Airbnb that section 36 is the provision effectively creating Mr. Lin’s cause of action, of which damages caused by the alleged violation of the Competition Act are an essential component (Godfrey at para 76; Murphy v Compagnie Amway Canada, 2015 FC 958 [Murphy] at paras 83-85; Singer v Shering-Plough Canada Inc., 2010 ONSC 42 [Singer] at paras 107-108). The combined features of paragraph 36(1)(a) and section 54 of the Competition Act limit the availability of this cause of action to claimants who can demonstrate that the defendants’ conduct satisfies all elements of section 54, as well as a causal link between the loss or damage suffered and the “double ticketing” conduct.
(3) The “product” issue
[43] Airbnb first submits that it is plain and obvious that section 54 cannot apply to this case since there are two prices for two different products. Airbnb submits that Mr. Lin’s Statement of Claim does not expressly define the “product” at issue, but that the pleadings imply that it is the accommodation reserved and booked by Mr. Lin. Airbnb also states that Mr. Lin’s Memorandum of Fact and Law expressly identifies a “product”, namely the use of the Airbnb Platform. Airbnb maintains that, when Mr. Lin’s pleadings are taken as a whole, there are two products at issue in this case, supplied through the Airbnb Platform: (i) accommodations offered by Hosts to Guests; and (ii) the use of the platform offered by Airbnb to both Hosts and Guests. Airbnb contends that Mr. Lin conflated the two products and alleged that bundling the two products together in the Second Price amounted to a price increase for a single product.
[44] I am not persuaded by Airbnb’s interpretation and do not find that this is an adequate reading of Mr. Lin’s Statement of Claim.
[45] In his Statement of Claim, Mr. Lin notably alleges the following facts:
10. Airbnb is the operator of an online marketplace and hospitality service, enabling people anywhere in the world to lease or rent short-term lodging from any other person in the world who is offering accommodation for lease and/or rental.
11. At all materials [sic] times, Airbnb conducted its online marketplace and hospitality services primarily via various Internet platforms including websites (such as http://www.airbnb.com and http://www.airbnb.ca) and mobile applications on the Apple and Android operating systems (collectively the “Booking Platform(s)”).
[…]
17. On or about March 20, 2016, the Plaintiff contracted with Airbnb for accommodations for his vacation to Japan, including an accommodation in Shibuya, Japan under the following terms (the “Reservation”) […].
[…]
29. When a Class member completes any reservation for accommodations through Airbnb (including “Request to Book” and “Instant Book”), regardless of the Booking Platform used, Airbnb charges the Class member the Second Price, not the First Price.
[Emphasis added.]
[46] I concede that the pleadings could have been drafted with much more clarity and details regarding the actual product involved in Mr. Lin’s claim. Especially in a context where, in section 54 invoked by Mr. Lin to underlay his cause of action, the notion of “product” is a central element. However, at this certification stage, I must adopt a generous reading of the pleadings. The pleadings should be read as a whole and be given a liberal interpretation, with a view to accommodating any inadequacies in the allegations and without fastening onto matters of form (Operation Dismantle v The Queen, [1985] 1 SCR 441 at para 14; Wenham at para 34; John Doe FCA at para 51; Shah v LG Chem Ltd., 2018 ONCA 819 [Shah] at paras 74, 76; Finkel v Coast Capital Savings Credit Union, 2017 BCCA 361 [Finkel] at para 17).
[47] In his Statement of Claim, Mr. Lin refers to Airbnb’s online marketplace and hospitality service or services and to the fact that what Mr. Lin and the Class members contracted for and purchased is a reservation for accommodation through Airbnb. I am satisfied that, when read in context, Mr. Lin’s Statement of Claim identifies one “product” supplied by Airbnb, namely the accommodation booking services offered and supplied by Airbnb through its platform. Put differently, I do not find it plain and obvious that, as argued by Airbnb, the pleadings relate to two prices for two different products.
[48] Though I acknowledge that this is not part of the pleadings, I pause to note that, in his Memorandum of Fact and Law, Mr. Lin repeatedly and expressly refers to Airbnb’s “accommodation booking service” or “accommodation booking services” when he describes the product being supplied by Airbnb, and for which he claims Airbnb violated the “double ticketing” provision. These accommodation booking services relate to the use of the Airbnb Platform to find and book accommodations.
[49] My understanding of Mr. Lin’s allegations is that the product effectively offered and supplied by Airbnb is a specific service: the access to and use of the Airbnb Platform in order to find a pool of accommodations and to eventually book one. Mr. Lin acknowledges that Airbnb does not own the accommodations offered by the Host, but the fact that Airbnb does not own the accommodations displayed through its service does not mean that Airbnb is not supplying a service for the booking of such accommodations.
[50] According to Mr. Lin’s pleadings, the product supplied by Airbnb (i.e., its booking service) does not change between the search results phase, where the First Price is expressed, and the booking phase, where the Second Price is expressed. The product is always the access to and use of the Airbnb Platform in order to find and book accommodations on Airbnb’s digital marketplace. In my view, the pleadings made by Mr. Lin do not suggest that a new service element is “added” by Airbnb at the booking stage, or that Airbnb performs an additional service at the booking stage, as opposed to the search results stage. The service of providing a booking platform, where Hosts and Guests can transact, is the “product” supplied by Airbnb as soon as a person enters the Airbnb Platform (where the Guests and Hosts have access to the relevant information and presentation of that